Your Dreams, Our Knowledge...Creating Estate Plans that Work!

Posts from March 2016

03/31/2016

There were approximately 10.9 million unpaid caregivers (family members and friends) providing care to persons with Alzheimer's or dementia in 2009.

According to the Alzheimer's Association, those persons are at high risk of developing health problems, or worsening existing health issues. For example, family and other unpaid caregivers of people with Alzheimer's or another dementia are more likely than non-caregivers to have high levels of stress hormones, reduced immune function, slow wound healing, new hypertension and new coronary heart disease.

Spouses who are caregivers for the other spouse with Alzheimer's or other dementia are at greater risk for emergency room visits due to their health deteriorating as the result of providing care. A study mentioned in the 2010 Alzheimer's Association report found that caregivers of spouses who were hospitalized for dementia were more likely than caregivers of spouses who were hospitalized for other diseases to die in the following year.

According to the National Nursing Home Survey 2004 Study, the most recent of its kind, the national average length of stay for nursing home residents is 835 days, with over 56% of nursing home residents staying at least one year. Significantly, only 19% are discharged in less than three months. Those residents who were married or living with a partner at the time of admission had a significantly shorter average stay than those who were widowed, divorced or never married. Likewise, those who lived with a family member prior to admission also had a shorter average stay than those who lived alone prior to admission.

While a relatively small number (1.56 million) and percentage (4.5%) of the 65+ population lived in nursing homes in 2000, the percentage increased dramatically with age, ranging from 1.1% for persons 65-74 years to 4.7% for persons 75-84 years and 18.2% for persons 85+. According to the U.S. Census Bureau, 68% of nursing home residents were women, and only 16% of all residents were under the age of 65. The median age of residents was 83 years.

Not only will many individuals and families face prolonged long term care, in-home care and nursing home costs continue to rise. According to the Genworth 2015 Cost of Care Survey, Assisted Living, Adult Day Services, and Home Care Costs national averages for long term care costs are as follows:

Daily rate for a private room in a nursing home is $250, or $91,250 annually, expected to increase 4% annually.

Daily rate for a semi-private room in a nursing home is $220, or $80,300 annually, expected to increase 4% annually.

Hourly rate for home health aides is $21.50, expected to increase 4% annually.

These costs vary significantly by region, and thus it is critical to know the costs where the individual will receive care. For example, the median annual cost for a private room in the state of California during 2015 was $104,025, whereas the median cost for a year in a semi private room was nearly $90,000.

Perhaps most importantly, despite overwhelming and compelling statistics; most Americans grossly underestimate the risk of disability to themselves and to their loved ones. According to the Council on Disability Awareness 2010 survey:

64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career; the actual odds for a worker entering the workforce today are closer to 25%.

Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.

Given the high costs of care, this underestimation often leaves Americans ill prepared to pay for the costs of long term care. Over the years, we've helped thousands of Virginia families plan for long term care so that these expenses can be met. If you are a caregiver for a disabled loved one, it is extremely important that you have a plan that addresses what would happen if you died before they do. We can help you with that; call us to schedule your complimentary consultation today.

03/30/2016

No one likes to think about the possibility of their own disability or the disability of a loved one.

However, statistics proved that we should all plan for at least a temporary disability, regardless of our age. Study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime. More specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, according to the definitive study in this area, depending upon their ages, up to 44% of Americans will face a disability of up to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than die in any given year.

Unfortunately, for many Americans, the disability they face will not be short-lived. According to the 2007 National Home and Hospice Care Survey, conducted by the Centers for Disease Control's National Center for Health Statistics, over 1.46 million Americans received long term home health care services at any given time in 2007 (the most recent year this information is available). Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one "activity of daily living" (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer's disease). The average length of service was more than 300 days, and 69% of in-home patients were 65 years of age or older. Patient age is particularly important as more Americans live past age 65. That number is expected to increase to 12 million by 2020. The Department also estimates that 70% of all persons age 65 or older will need some type of long term care services during their lifetime.

One of the big contributors to the need for long term care is Alzheimer’s disease. Alzheimer's is growing at an alarming rate. Alzheimer's increased by 46.1% as a cause of death between 2000 and 2006, while causes of death from prostate cancer, breast cancer, heart disease and HIV all declined during that same time period.

The 2015 Alzheimer's Association annual report titled, “Alzheimer's Disease Facts and Figures” explores different types of dementia, causes and risk factors, and the cost involved in providing health care, among other areas. This report contains some eye-opening statistics:

An estimated 5.3 million Americans of all ages have Alzheimer's disease. This figure includes 5.1 million people aged 65 and older and 200,000 individuals under age 65 who have younger-onset Alzheimer's.

One in nine people age 65 and older (11 percent) has Alzheimer’s disease.

About one-third of people age 85 and older (32 percent) have Alzheimer’s disease.

Eighty-one percent of people who have Alzheimer’s disease are age 75 or older. The number of people aged 65 and older with Alzheimer's disease is estimated to reach 7.7 million in 2030 - more than a 50% increase from the 5.1 million aged 65 and older currently affected.

Every 67 seconds, someone in the United States develops Alzheimer’s. Thus, approximately 473,000 people age 65 or older developed Alzheimer’s disease in the United States in 2015.

By 2050, the number of individuals aged 65 and older with Alzheimer's is projected to number between 11 million and 16 million - unless medical breakthroughs identify ways to prevent or more effectively treat the disease.

Disability planning is one area where we can give each and every person and family we work with great comfort in knowing that, if they or a loved one becomes disabled, they will be prepared because of the planning we help them create. Call us today to schedule your complimentary consultation; we can help.

03/29/2016

Mary Jane Foseid received a large settlement following an accident that killed her husband Walter. What Mary Jane chose to do with this money should have been no one’s business but her own; however, the question of why she did as she did when all the way to the Wisconsin Court of Appeals. Why? Because she gifted $51,000 to two of her four children, $102,000 to one of her children and 73 cents to her four child. As you read this, you have likely jumped to your own conclusions. Perhaps Mary Jane had a favorite child and a child she just didn’t get along with. What if I were to tell you that one of Mary Jane’s children was a special needs person –would that effect your conclusion about her motive for gifting as she did?

What plan should you make when one of your children, disabled from birth, depends upon the Medicaid system to provide her with life sustaining medical care? Do you give her share to one of her siblings and ask that they spend it to her benefit? Although this is a fairly common question I am asked by parents in my practice, it is one of the few times that I give a universal answer: No. It’s doomed to fail in ways that you might not imagine. Certainly, Mary Jane could not imagine that one of her children, more than seventeen years after she gave her gifts would contest the way in which her sister spent her ‘double share’ by suing two of her siblings. She hoped her lawsuit would force them to divulge their mother’s plan. She was absolutely certain that her mother intended her sister to provide one half of her share to her little sister with disabilities and she wanted an accounting to prove that the money was spend appropriately. Whether the lawsuit was motivated by a desire to make sure her sister got her fair share of the gift or she was incensed at not being included in the so-called family planning, the reason for her action is less important than its result which was many thousands of dollars wasted on an expensive lawsuit that need never have happened.

There is absolutely no reason to exclude a child with special needs when it comes time to make gifts. The solution to maintaining their eligibility for government programs such as Medicaid is to create and fund a special needs trust. The money held by the trustees won't affect the beneficiary's ability to qualify for those government benefits and will be clearly set aside for her benefit with legal as well as moral obligations to use the funds in the trust for the disabled child’s sole benefit.

If you are thinking of making gifts to children or other relatives or friends, and one member of the group has special needs, talk with us or your estate planning law firm about how best to structure your gift. Call us to request your complimentary consultation today.

03/28/2016

Manny Martinez lives in rent-controlled senior housing and watches his expenses. However, with all of his other bills going up, money from his Social Security—his only income—makes things rather tight financially for the 83-year-old. Sometimes he receives food from a church food bank where he volunteers. In fact, a new report from the National Council on Aging shows that more seniors than ever before a in financial straits many needing to borrow funds or go into debt just to meet their ordinary expenses."

The report found that borrowing by seniors has doubled their debt in the past decade, with more than 61% of households headed by an adult over 60 having some form of debt. Many factors could be a part of this new reality. Parents who have had their children later in life find themselves saddle with large mortgages in order to meet their children’s college expenses. All too often, seniors find that the idea of downsizing to a smaller home is actually more expensive than they thought incurring more expense than they intended to in their move (especially if it is to a CCRC). Losing your spouse income after their death while trying to maintain the same lifestyle is a not so uncommon problem for seniors as well; less income with all the same bills for taxes, insurance, household expenses, healthcare costs and other bills remain constant is a recipe for financial disaster.

The National Council on Aging report says that among older households with debt, the median total debt was $40,900 in 2013, which is more than double what it was in 2001. One third of senior homeowners owed money on a mortgage or home equity line of credit, with 30% owing payments that were more than 25% of their income. Seniors are also taking payday loans at a rate four times higher in the past five years.

The report, which includes the results of a survey of professionals who work with seniors, states that more than 90% said that medical debt threatened their clients' financial security. If this is a concern of yours, we can help you with identifying ways to meet long term care expenses. Why not call our office and schedule your complimentary consultation today?

03/25/2016

The process for declaring someone legally dead is one that is covered in state law, but in Pennsylvania, the statute's language does leave some leeway to the judge considering the petition.

If one were to evaluate the Pennsylvania statute based on the events surrounding the Evans family, one might leap to the conclusion that the law very likely does not go far enough to completely exhaust the possibility that a person is dead.

The list below gives you a thumbnail sketch of what the law requires:

The person must be missing for at least seven years;

Their absence must be deemed unexplained; and

A judge must rule that an attempt has been made to find the individual.

The process that the Evans’ family had to follow according to Pennsylvania law was to make a "diligent inquiry" into their family member's disappearance; however, the law does not say what exactly a "diligent inquiry" is. In this case, the judge was confident that the family had made a thorough effort to find David Brian Evans.

The most likely reason one might wish to declare someone dead is for estate planning purposes. In this unfortunate tale, Diane Gentry, the sister of the ‘dead’ man, initiated a petition to declare her brother, David Brian Evans dead so her father's assets could be divided among his survivors after his death in 2011. The court granted Diane Gentry's petition. However, Evans reappeared just last month at a Maryland restaurant where he shot and killed two deputies. Police subsequently shot and killed Evans.

The potential problem is that while the premature declaration of death had nothing to do with David Brian Evans’ subsequent heinous act we all too often see bad acts resulting in bad law. Hopefully it will not result in the Pennsylvania legislature rushing to judgement by making the language of the statute tougher than it needs to be.

Obviously, a missing loved one is rare, not a likely occurrence in most people lives. It would not be overreach however, if your estate plan were to provide instructions on how you would expect your Trustee or Executor to act if this were to occur. Very few laws were written to meet every individual need which is why an estate plan designed around your family dynamic is so important. Call us to schedule your complimentary estate planning consultation today.

03/24/2016

While Virginia has no inheritance tax there are six states that do. Before you leave the Commonwealth, taxes may be one more factor in your decision of where to retire.

Although I was born in New Jersey, it is not the best state to die in these days. Let me say to all of you that have moved to the Old Dominion: "Great choice!" The reason so many seniors are heading south for retirement has a much to do with taxes as it does with the weather or at least it should. You see, New Jersey has both a 'death' tax and an inheritance tax-- good grief!

The amount of tax depends on the transfer amount, or "taxable estate," and who is receiving the transferred amount. The transfer amount is in essence the fair market value of the deceased's assets plus any life insurance proceeds. There are both federal and state estate tax laws to look at when evaluating a deceased's estate. The state where Grandma resided at the time of her death is important, rather than where the heirs live. If Grandma was a New Jersey resident at the time of her death, estate taxes could apply when assets are left to anyone other than her spouse.

The federal estate exemption amount is currently $5.45 million per person. You are only taxed if more than the exemption amount is transferred at death. However, if any lifetime taxable gifts were made by the deceased, it's possible the estate could be subject to estate tax even if the estate is less than the exemption amount. That's because a taxable gift is a gift in excess of the annual gift tax exclusion amount of $14,000 per person.

But if Grandma's taxable estate is less than the exemption amount—after adjusting for any lifetime taxable gifts—there would be no federal estate taxes due. New Jersey has a state estate tax exemption of only $675,000. As a result, many state residents will be subject to state estate taxes. But again, if Grandma's taxable estate is less than $675,000, there's no New Jersey estate tax due.

There's also the issue of state inheritance tax. The taxable estate for New Jersey inheritance tax purposes has two important adjustments: gifts made within three years of death are generally added back, and life insurance proceeds are exempt if paid to a named beneficiary (but not if they were paid to the estate of the deceased).

At these they don't take two tax bites; you only have to pay the greater of the New Jersey estate tax or the inheritance tax, but not both. Also, immediate family members—including the spouse, grandparent, child, or grandchild—are exempt from the inheritance tax which is much better than Pennsylvania's inheritance tax that has no such exemption except for surviving spouse. Recognize that the better tax deal is still here in Virginia with no estate or inheritance taxes.

With some many differences from state to state when it comes to settling an estate and paying the appropriate taxes, it's best to speak with with an experienced estate planning attorney about intestacy and estate/inheritance tax laws in the deceased's home state. We can help you with that, call today for your complimentary consultation at 757.259.0707.

03/23/2016

Divorce can take a toll financially on both spouses, with this immediate financial burden resulting directly from the separation of the household.

When a couple splits, they end up doubling their housing, utility and other regular costs. After this, there is the property division. This can stifle each spouse's progress toward long-term goals like retirement or the children's education.

Here are several important tips for those going through or recently completing the divorce process:

Monitor assets in your divorce settlement: If you're in the midst of a divorce, examine the type of assets that you receive as part of your divorce property settlement. The reason for this is your cash flow. Even in cases where the math demonstrates an equal split between the two parties, one spouse could get stuck with a non-liquid asset, which might end up being difficult to liquidate if cash flow becomes a problem.

Factor in an asset's taxable status: For many couples, a $100,000 brokerage account—for which you'll only pay tax on capital gains or dividends—might be of greater value than a $100,000 tax-deferred retirement account because you'd have to pay income tax on withdrawals from that type of account.

Keep an eye on taxes and their effects: Taxation influences continuing income. For example, the payment of alimony is tax deductible, but the receipt of alimony is treated as ordinary income. However, child support is not taxable to the recipient, which may change the way you prepare your annual tax return and the amount you owe the IRS. Make sure you keep this in mind the next time you file your taxes.

Review and update your estate planning documents: Once the divorce is final, both ex-spouses need to make sure to update all aspects of their financial lives. This includes beneficiary designations on pensions, 401(k)s, and life insurance (if not part of the settlement terms), as well as all estate planning documents—like your will, powers of attorney and trusts. This is especially important if you do not want your ex managing and distributing the assets that you have designated for your minor children. Creating a trust that appoints a Trustee to both manage your wealth and make the appropriate distributions is the best course to take in this situation. It is also vital to your well being that you designate someone who can make healthcare (and financial) decisions when you cannot make these decisions for yourself. I spend a lot of time talking about incapacitated seniors but the sad truth is that there are an equal number of people, regardless of age, that are incapacitated as the result of an accident. We all need an estate plan.

03/22/2016

The monumental battle over the $100 million-plus estate of art collector Melva Bucksbaum is now being broadcast in a family war of words on Facebook. Really??

This battle began when Melva Bucksbaum Scanlan, a former trustee of the Whitney Museum, died at 82 last year. Her husband Raymond Learsy—a trader, developer, and fellow Whitney board member—challenged her will and claims he's entitled to half her fortune, which is worth more than $100 million.

The action infuriated Melva's adult children, Gene and Glenn Bucksbaum and Mary Bucksbaum Scanlan. Glenn says that Learsy schemed to seize the family millions. He wrote on his public Facebook page, "Raymond Learsy…This name should be known. Full definition of cad. 1: An omnibus conductor 2: a man who acts with deliberate disregard for another's feelings or rights."

Learsy's lawyer, Hugh J. Freund, said of the real estate, "It was Ray's own personal estate planning and has nothing to do with Melva's estate. Glenn [is] going out of his way to cause a problem, where everyone else in his family is being constructive to resolve this issue."

Learsy was left about $10 million in trust in Melva's will. He also was to receive a $25 million home, but now he claims he's entitled to half of her fortune, which includes a Tribeca loft, homes in Connecticut and Aspen, and a valuable art collection.

Melva's New York friends are "appalled" that Learsy is planning a memorial for her in April while contesting the will. One friend said, "It's distasteful. He's acting like the grieving husband around New York while challenging her will in Aspen." Bucksbaum's children's lawyer, William D. Zabel, added, "I stand by my prior statement that he [Learsy] is a colossal cad."

Once again, the moral of this story is not how the rich and famous live but what lessons we can learn from their all-to-public family scrabbles. As my clients already know, a living trust is a confidential family document that is all but impossible to contest unless the Trustmaker had no capacity to create a trust in the first place; unlikely given the time and effort we take to ensure that the language of your trust will best suit you and your loved ones. Why not call us to schedule your complimentary consultation today?

03/21/2016

Given conflicting medical reports, there is no one who can resolve this but a judge.

Most of us don't have a billion dollar estate to manage, nevertheless, losing our ability to manage what we have worked a lifetime acquiring would be devastating. We have enormous empathy therefore for the tribulations faced by media mogul, Sumner Redstone, whose capacity to continue to operation his $3 billion holdings in Viacom Inc. and CBS Corp is being challenged by his ex-girlfriend, Manuela Herzer.

A Los Angeles probate judge asked whether it was wise for the 92-year-old to name Viacom CEO Phillipe Dauman as his agent in charge of his health care decisions rather than a family member. Judge David Cowan, who will decide the case without a jury, said he isn't confident things "are all patched up" between Sumner and his daughter Shari Redstone. Herzer contends that Redstone is incapacitated and manipulated by those around him.

At least one shareholder has sued the boards of Viacom and CBS, accusing them of wasting millions of dollars paying Redstone when he was unfit to take an active role in the businesses. He stepped down as chairman of both companies only last month, days after he was examined by a psychiatrist designated by Herzer as part of her court case.

The control of Redstone's 80% voting stakes in Viacom and CBS will pass to a family trust if he becomes incapacitated or dies. Shari Redstone and Dauman are two of the seven members of that trust. Redstone's Viacom and CBS holdings are exempt from the lawsuit, as the family trust that will take control was established long ago.

Herzer, who describes herself as Redstone's longtime companion and caretaker, alleges he wasn't able to make his own decisions when he removed her from his advance healthcare directive and evicted her from his mansion last fall. Redstone's lawyers claim Herzer's ulterior motive is to contest her removal from his will. She apparently stood to inherit $50 million plus Redstone's $20 million home before she was cut out of his estate plan.

As you read this, please don't dismiss it as just another story about the rich and famous. This did not occur simply because Redstone has amassed a fortune. It's more likely this is a tale of a loved one scorned. Which makes it the type of thing that happens to ordinary people every day. Isn't it time you put an estate plan that works in place? We can help with that; schedule your complimentary consultation today.

03/18/2016

Music legend Glen Campbell’s wife, Kim Campbell, first saw the signs of forgetfulness but chalked it up to the normal aging process.

Once she suspected that her husband had a serious problem—more than just senior moments—she needed to get a diagnosis. Glen Campbell, now 79, was diagnosed with Alzheimer's in 2011. He performed the final show of his farewell tour in late 2012. I have talked about how important an early diagnosis is for the patient and their loved ones alike but know you have this sage advice from someone who has witnessed the ravages of this dreaded disease. As Kim Campbell tells us from her first hand knowledge of this situation, "Getting the diagnosis helped me a lot," She was candid with the reporter who interview her recently about her what she has learned from her husband's healthcare crisis, admitting, "Before the diagnosis, I would get frustrated with him, and irritated and annoyed."

Alzheimer's impacts about half of all people over the age of 85 and kills nearly 100,000 Americans each year. It's named for the German doctor Alois Alzheimer, who discovered the distinctive tangles and plaques of the disease in the brain of a female dementia patient in 1906. Kim Campbell said the disease needs to be approached from a perspective of examining what the patient still can do versus what he or she can't. What can caregivers do to give them comfort and joy?

Glen Campbell now resides in a memory care unit. As with so many caregivers before her have tried Kim Campbell said she brought Glen Campbell home one last time — "I missed him so much, and I thought, I've just got to try it one more time. (But) I couldn't bathe him without a fight, or change his clothes. Glen's a big man, and he was not easy." Kim Campbell said she speaks out about Alzheimer's disease to help families because Alzheimer's "is definitely the most feared disease. You lose control of your life. There are identity issues and autonomy issues." Campbell also suggests that caregivers give themselves breaks and take care of themselves because the stress for caregivers is enormous.

She also emphasized that estate planning is very important and noted the need for advance health care directives. You can’t put this off any longer, we can help you with these important estate planning documents, call us to schedule your complimentary consultation today.